Highbridge, Apollo plan more than $2 billion in new CLOs; $13 billion of deals in pipeline

By Cristal Cody

Tupelo, Miss., Aug. 2 - The August calendar for new collateralized loan obligations continues to fill in, though the future market could be dramatically smaller through the 5% risk retention requirement under the Dodd-Frank Act, according to a Loan Syndications and Trading Association survey.

More than half of CLO managers would not be able to issue CLOs, according to the survey of 35 CLO managers.

Stronger CLO issuance has helped demand for loans over the year, Barclays analysts said on Friday.

Second-lien leveraged loan issuance has "picked up share from the bond market," the analysts said in a note. "The trend appears to have accelerated this year, which is consistent with strong demand for loans driven by resurgence in CLO issuance and duration fears."

As of Friday, $46.3 billion in 96 new CLOs have priced and the market is targeted to hit $70 billion for the year, sources said.

About $13 billion of issuance in 28 deals is coming up in the pipeline, according to one market source on Friday. In the European market, more than €1 billion of deals are expected in the next couple of months.

Highbridge Principal Strategies, LLC is set to return to the market to price its second CLO. The firm intends to sell $412.75 million of notes early in the month, according to a market source.

Apollo Credit Management LLC also expects to be in the primary market with two new CLOs - the $855.5 million ALM VII(R), Ltd./ALM VII(R), LLC offering and the $930.45 million ALM VII(R)-2, Ltd./ALM VII(R)-2, LLC deal.

Highbridge preps CLO

The Highbridge Loan Management 2013-2, Ltd./Highbridge Loan Management 2013-2 LLC deal will include $260 million of class A-1 senior secured floating-rate notes (Aaa); $43 million of class A-2 senior secured floating-rate notes; $22.5 million of class B-1 senior secured deferrable floating-rate notes; $9.5 million of class B-2 senior secured deferrable fixed-rate notes; $19.5 million of class C senior secured deferrable floating-rate notes; $16 million of class D senior secured deferrable floating-rate notes; $8 million of class E senior secured deferrable floating-rate notes and $34.25 million of subordinated notes.

Citigroup Global Markets Inc. is the underwriter.

Highbridge Principal Strategies will manage the CLO, which is backed by broadly syndicated corporate loans.

The deal is expected to close in September.

The New York-based investment management firm brought its first CLO, the $313 million Highbridge Loan Management 2012-1 Ltd. offering, in September 2012.

Apollo readies for CLO deals

Apollo Credit Management's $855.5 million ALM VII(R) offering of notes due 2024 includes $497.5 million of class A-1 senior secured floating-rate notes (Aaa/AAA/); $95.7 million of class A-2 senior secured floating-rate notes (/AA/); $76.9 million of class B senior secured deferrable floating-rate notes (/A/); $54.9 million of class C senior secured deferrable floating-rate notes (/BBB-/); $25.7 million of class D secured deferrable floating-rate notes (/BB-/); $24.3 million of class E secured deferrable floating-rate notes (/B/) and $80.5 million of subordinated notes.

The ALM VII(R)-2 transaction will offer $541.7 million of class A-1 senior secured floating-rate notes (Aaa/AAA/); $104.2 million of class A-2 senior secured floating-rate notes (/AA/); $83.75 million of class B senior secured deferrable floating-rate notes (/A/); $59.775 million of class C senior secured deferrable floating-rate notes (/BBB-/); $27.975 million of class D secured deferrable floating-rate notes (/BB-/); $26.45 million of class E secured deferrable floating-rate notes (/B/) and $86.6 million of subordinated notes.

J.P. Morgan Securities LLC is the underwriter on both deals.

Apollo, a subsidiary of Apollo Global Management, LLC, will manage the CLOs, which are backed by revolving pools of broadly syndicated senior secured corporate loans. The portfolios are expected to be 100% ramped when the deals close on Sept. 5.

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